Financial Data and Key Metrics Changes - Total company revenue grew 16% sequentially to $30.6 million, exceeding guidance [7] - GAAP gross margin was 39.8%, and cash gross margin was 45.3%, both exceeding guidance due to a favorable mix [8] - Adjusted EBITDA was a profit of $362,000, compared to guidance of a loss between $1.8 million to $800,000 [8] - Cash flow from operations was positive at $6.1 million, and free cash flow was positive at $3.8 million [9] - Year-over-year revenue grew 3%, driven by a 39% increase in security solutions, partially offset by a contraction in secure networks [9] Business Line Data and Key Metrics Changes - Security solutions revenue grew 18% sequentially to $25.8 million, while Secure Networks grew 8% sequentially to $4.8 million [7] - Security solutions revenue increased from 63% of total company revenue in Q1 2024 to 84% in Q1 2025 [10] - Adjusted operating expenses declined by $1.3 million year over year due to a restructuring and cost reduction plan [11] Market Data and Key Metrics Changes - The TSA PreCheck program is expanding, with 73 new enrollment locations added, totaling 291 locations across the U.S. [12] - The DMDC program is ramping on schedule and is expected to be a major source of revenue growth [13] Company Strategy and Development Direction - The company aims to achieve 500 TSA PreCheck enrollment locations by the end of 2025 [13] - The focus remains on expanding security solutions, particularly through the DMDC and TSA PreCheck programs [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving year-over-year growth in revenue, adjusted EBITDA, and cash flow, particularly in the second half of 2025 [20] - The company anticipates a significant turnaround in cash flow for the full year, driven by TSA PreCheck performance [31] Other Important Information - The company expects revenue for the full year to be comprised of existing business and new programs, estimating DMDC and DHS programs could generate $50 million to $75 million [17] - The overall market for renewals is expected to contract significantly this year [52] Q&A Session Summary Question: Any changes on the new business front and margin profile for DMDC? - Management indicated that DMDC will generate substantial revenue but will be dilutive to overall margins, with lower margin revenue streams ramping [25][26] Question: What is the cash gross margin outlook for the year? - Management expects approximately 600 basis points of sequential cash gross margin dilution from the first half to the second half of the year [37] Question: Will free cash flow be negative in Q2 2025? - Management did not guide on Q2 free cash flow but indicated a significant improvement compared to the previous year [42][48] Question: Which business line was the bigger outperformer in Q1? - Security solutions was identified as the bigger outperformer, driven by both TSA PreCheck and DMDC [49][50] Question: What is the outlook for the renewal market? - The renewal market is expected to contract significantly this year, as observed in Q1 [52]